The Forex Daily Digest – July 10, 2009

It’s been a busy week and the G8 comes to an end in Italy. The G8 leaders of both developed and emerging nations evaded a debate over the USD’s role in the global economy as they agreed not to devalue their currencies to support their own exports.

Officials from Brazil, India, China and Russia pushed for consideration of alternative reserve currencies, the verbiage in their joint statement on foreign exchange reaffirmed an agreement from the April summit of the Group of 20. Brazilian and Russian officials say they intend to bring the issue up again at the next G-20 meeting in Pittsburgh in September.

The JPY could continue its decline after falling against almost all its major counterparts as concern eased that the global economic recovery may be slower than first anticipated. The JPY fell against the EUR for the first time in six days, and the EUR rose to a one week high against the USD.

The CAD rose from near a seven-week low as advances by commodities and stocks boosted investor demand for higher-yielding assets such as commodity- linked currencies. The loonie increased for the first time in three days as growth in Canadian housing starts beat forecasts. The International Monetary Fund said this week that Canada’s economic position is likely to be among the weakest, while its recovery among the strongest, among developed countries.

We’ll be closing out the week with a number of major economic reports. Look for the Import and Export figures for June; the U.S. Trade Balance for May is also scheduled for release on Friday morning. Last month the Trade numbers came in at negative $29.2 billion and the street is expecting a negative $30.0 billion this month. Then after the market opens, look for the preliminary University of Michigan Consumer Sentiment report. Indications are that it could experience lower numbers than last month.

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